Market Timing Pro

Beliefs of Successful Market Timers

Successful market timers, meaning profitable market timers, have several common beliefs that help them achieve consistent profits.

On the flip side of this, those who are unsuccessful also have a set of common beliefs.

It is a good idea to know which beliefs will help you to succeed, and which ones you may have, that need to be changed.

Beliefs of Successful Market Timers

1. I will not jump into a trade before or after a signal just so that I can be participating.

2. I recognize that discipline is not a concept, it is an absolute necessity. The markets have a way of removing money from undisciplined market timers.

3. I realize that what happens today, this week, or even this month, is not what is important. What "is" important is my success over time.

4. I realize that losses are part of trading. No strategy is without losses.

5. I accept that sometimes my investments will under perform the market, knowing that over time, they will outperform the market.

6. I know that following a timing strategy through good times and bad are what will make me successful.

7. I can follow a strategy for the long haul and stick with it, even when at times it is discouraging.

8. I accept that following a timing strategy will require me to make frequent trades that may seem like mistakes. A string of successive small losses will not make me quit.

9. I can ignore the mass media, which raise emotions and thus increase the risk of not executing a trade. It is often the trade that is hardest to take, that winds up being the most profitable.

10. The markets provide a constant stream of opportunities. If I miss an opportunity, another one will follow.

11. Keeping losses small and letting profits ride is not just a Wall Street saying.

Beliefs of Unsuccessful Market Timers

1. I must be trading all the time to be successful. I am uncomfortable when in cash.

2. If my strategy is not doing what I think it should, I will make a change immediately.

3. If I lose on this trade, I feel like a loser.

4. If the market is rallying, I must get in even though my strategy gave no signal for it.

5. I am unlucky.

6. I get very upset when I miss a rally, or if I am in a bullish position when the market is declining.

7. I dread adverse news events and constantly worry that something will happen to make the markets go against me.

8. I can't afford to lose anything on this buy or sell signal.

9. I can't go broke taking small quick profits.

10. When this losing trade gets back to even, I'll dump it.

Final Notes on Unsuccessful Timers

Unsuccessful market timers tend to see the stock market as a place that will give them future riches and solve all their problems.

Unsuccessful market timers have difficulty coping with the reality of being wrong. When events don't live up to their hopes, they seek to ignore them.

"As a successful market timer, you have to move from a fearful mind set to a psychological state of confidence. "

If their timing strategy gives a sell signal and they have losses in that position, they have a difficult time executing the sell signal and they will hold the position so that they can exit when it gets back to break even.

When things get really bad, they often exit with huge losses and blame the strategy, the timing service, the markets. Everyone but themselves.

Many market timers give up because they are usually too quick in judging consecutive small loses as a system that is not working.

Giving up is the most common way a market timer can lose. You will win only if you execute the timing strategy. Every trade.

Paper trading cannot simulate the psychological aspects of trading with real dollars. Once a market timer has experienced what it is like to keep trading through a draw down and how good it feels to follow the strategy through the good, the bad and the ugly days, he or she will not be as easily swayed again by adverse markets.

Final Notes on Successful Timers

Successful market timers know how to follow a strategy. They know the stock market is not a game and the only way to succeed is with a plan.

As a successful market timer, you have to move from a fearful mind set to a psychological state of confidence.

You must use a strategy that builds confidence by keeping losses small and letting profits ride when the markets trend.

Do not focus too much on each individual buy and sell signal. It is where the strategy takes you over years of trading that is important.

Higher highs Ahead for Dell Inc (NASDAQ: DELL)

July 1, 2009

Shares of Dell Inc (NASDAQ: DELL) have been moving higher in a pretty spectacular fashion. Dell is up 74% from its February bear market lows.

But how high can Dell go?

Just using the last bear market selloff for Dell, from August 2008 to February 2009, we can estimate the potential still ahead for this global computer maker.

The 50% retracement for this period is at $16.98. The Fib 61.8% retracement, a likely target for the short term, is at $19.13.

There is a good chance that Dell will reach the $19.13 level in coming months, even with the occasional market selloff along the way. As the economy recovers Dell will move much higher still, but for now a target of $19.13 is a good bet.

The Fibtimer.com (http://www.fibtimer.com) ETF Timing Strategy holds a position in Dell.

All Uphill for IShares Lehman 20Yr (NYSE: TLT)?

June 30, 2009

Shares of ISHARES Lehman 20Yr (NYSE: TLT) have been rising over the past two weeks, after a decline that lasted almost seven months and loped some 28% off share prices.

The question is; are the declines over and are higher prices ahead?

Though the advance seems solid, we do question the lows reached back on June 10. Those lows did not reverse at support, but instead broke well below support before turning higher. Typically, when support is broken, the declines have not ended.

The advance appears to have more than acceptable risk in it and if a bullish position is taken, we would recommend a close trailing stop. There could still be more downside ahead.

The Fibtimer.com (http://www.fibtimer.com) ETF Timing Strategy holds a position in TLT.

The Perfectionist Trader

Perfectionism may help some people succeed in many other careers. It is often the difference between success and failure.

We have all been brought up knowing that we must strive to be all that we can be, and to put everything into achieving our goals.

But perfectionism can be fatal in market timing (and all trading). Ironically, it leads neither to higher performance nor greater happiness. Anyone who approaches the financial markets with the intention of winning on every trade, or even on most trades, is in for a huge surprise.

Perfectionism can destroy your enjoyment of market timing. The perfectionist needs to be a winner in all or most of his or her trades. A losing trade may escalate to a panic-like state. It can even cause you to miss buy and sell signals out of fear of the results.

The drive to be perfect becomes self-defeating, as the individual often places the intense pressure on himself, which can become crippling.

Fear Of Failure

Probably the biggest obstacle to overcome as a market timer is the fear of failure.

If you have a perfectionist mentality when market timing, you are really setting yourself up for failure, because it is a given that you will experience losses along the way.

"...most buy and sell signals are generated when the prevailing sentiment is the opposite of the signal."

If you cannot take a loss when it is small, because of the need to be perfect, then the loss will often grow to a much larger loss, causing further pain for the perfectionist market timer. Holding onto a losing position, in hopes that it will return to break even, is a sure fire path to losses.

Trying To Control Uncontrollable Factors

Perfectionism causes timers to attempt to control uncontrollable factors in a trade (examples are; waiting for all the risk to be out and everything to look perfect, hoping or "willing" a better outcome by doubling down on a loser, cashing in on a profitable trade too quickly to be able to assure a gain, and many more).

When a market timer focuses on such uncontrollable issues, he or she is more likely to tighten up and not be able to pull the trigger when a new buy or sell signal is generated.

And remember, most buy and sell signals are generated when the prevailing sentiment is the opposite of the signal. That makes them harder to follow. But follow them you must if you wish to succeed.

Profits Are Achieved Over Time

We must remember that when timing the markets, it is the "total" gains achieved over a period of time that makes you a winner. Not any single trade. In fact, if losing on a trade is something that will cause you to second guess your next trade, you are very likely to lose money over time.

Perfectionism will eventually cause you to second guess and skip trades. It will grow into a fear that will hinder your ability to profit.

The only way to conquer fears. To control the emotions of fear and greed which make most traders lose in the financial markets, is to follow an unemotional timing strategy.

This is what we do here at FibTimer. Unemotional strategies that follow trends will never miss any sustained trend. Such trends are in progress as we write this commentary; in stocks, bonds, the U.S. Dollar. The stock market is currently in a year long up trend.

And when the current trends end, if you cannot execute the sell signals that will get you into cash or bearish trades, you will give your gains back. This is why committing to a tried and true timing strategy is the only way to win in the financial markets.

When following a strategy, you are not swayed by fear or greed. You cannot be moved by perfectionist tendencies. The strategy makes the decisions. Emotions are avoided. But you must commit, in order to succeed. Bypassing one's ego and committing is tough to do. But in doing so, you beat the market and profit.

Breakout for the S&P 500 SPDRS (NYSE: SPY)?

June 26, 2009

The S&P 500 SPDRs (NYSE: SPY) had dropped to below their 50-day moving average and 200-day moving average early this week. Both of these averages are watched closely be investors for signs of strength and weakness in stocks.

But on Thursday, June 25, the SPDRs reversed early day losses and rallied hard right into the close. A two percent gain at any time is a good day but Thursday’s gain reversed six days of lower prices and pushed the SPDRs back above those important moving averages.

To be certain there needs to be follow-through. Look for a continuation of the rally on Friday or early next week.

The http://www.fibtimer.com ETF Strategy has a position in the S&P 500 SPDRs.

Support Holds for JC Penny Inc (NYSE: JCP)

June 25, 2009

Shares of JC Penny Inc (NYSE: JCP) gained over 138% from their bear market lows to their May 6 highs. But since those highs JC Penny has been correcting.

If you draw a line connecting the daily highs on May 6 and June 2, and also draw a line connecting the daily lows at May 26 and June 22, you will create a pennant shape. The upper line is the declining trend resistance line and the lower is the rising trend support line.

Typically, when pennant patterns form after a substantial advance, they break to the upside and the advance continues.

A few days ago we wrote that if the lows at $24.56 hold, JC Penny could be headed back for a run to its prior rally highs.

It appears that they have. Look for higher highs and a test of the upper declining trend resistance line in coming days.

The Fibtimer.com (http://www.fibtimer.com) Stock Timing Strategy holds a position in JC Penny.

Schein Henry Inc (NASDAQ: HSIC) Holds above Support

June 24, 2009

Shares of Schein Henry Inc (NASDAQ: HSIC) remain above support at the $44.00 level.

The current weakness in stocks has also hurt shares of Henry Schein but they remain in an uptrend as long as they do not make a decisive close below support.

Watch $44 for a reversal and resumption of the uptrend. A close lower would take shares to at least $43 before the next support is reached.

The Fibtimer.com (http://www.fibtimer.com) Stock Timing Strategy holds a position in Henry Schein.

JC Penny Inc (NYSE: JCP) Nears Critical Support

June 23, 2009

Shares of JC Penny Inc (NYSE: JCP) have had a good run since successfully retesting their bear market lows back on March 6.

From their lows, they gained over 138% at their May 6 highs.

But since those highs JC Penny has been correcting and shares are now approaching their May 22 correction lows. If those lows at $24.56 hold, JC Penny could be headed back for a run to its prior rally highs.

But if JC Penny closes lower, we may have a way to go on the downside. Initial support is at $23.30 and critical support is at $21.07.

The Fibtimer.com (http://www.fibtimer.com) Stock Timing Strategy holds a position in JC Penny.

Wishing Upon a Star

If you had a million dollars, what would you do?

You wouldn't have to ever work again. You could just sit on the beach and relax. You could pay all your bills and set your family up to live comfortably forever.

What else could you wish for?

When you wish upon a star, if you're like most people, financial freedom is one of the first things on your list.

A crystal ball, perhaps. Or tomorrow's newspaper, just like on the television show "Early Edition." You would be able to know what the masses were going to do tomorrow. You could anticipate their every move with unfailing accuracy.

Think how easy trading would be? Wouldn't it be nice to be able to predict the future?

In The Wishing Mode

It's fun to wish that we could trade more profitably, but beware, wishing "could" be a sign of desperation.

When you are in wishing mode, you may passively wait instead of taking decisive action. Hoping for miracles and wondering if you'll ever see huge profits.

But if you take proactive steps, you won't have to wonder. Profitable market timers do not "wish" or "wonder." They act. What is the number one proactive step? Following a tried and true timing strategy.

"...when I am certain the market has topped and pull all my funds out, you can bet that will be the day a new rally starts."

Many novice market timers have trouble following a strategy. They make the decision to follow the plan, but when the time comes to execute a buy or sell signal, often at odds with current market sentiment, they find reasons "not" to make the trade. Or they delay executing the trade, and sometimes make a late entry after watching the trade work.

But the consistently profitable market timer maintains discipline, and that means not only deciding to follow a solid timing strategy, but also trading it through thick and thin.

With a tested strategy you can trade without fear. You do not need a crystal ball. A good timing strategy works across a variety of market conditions. It may not win on any single trade, but its methods give those who follow it that all important trading "edge."

Murphy's Law

When trading the markets, do you often feel that Murphy's Law says it all: "Whatever can go wrong, will go wrong."

Have you found yourself saying, "When I take a bullish position, the market always reverses and goes down."

Or, "When I am certain the market has topped and pull all my funds out, you can bet that will be the day a new rally starts."

Surprise!  This is "not" Murphy's Law. This is simply a trader who is trading by the emotions of fear, greed, hope or wishful thinking. Not following a plan.

A market timer who follows a good timing strategy may not always have a winning trade, but they know that the odds place them on the profitable side over time. Murphy's Law does not apply to those who follow a plan.

Predicting What The Masses Will Do

Can you predict what the masses will do? Sometimes, but not always. Profitable market timers, however, rely on their strategy. They do not try to predict.

A timing strategy removes emotion from the trading equation, and emotions, as we know, are the single most common reason that timers and traders lose.

All market timers should be students of the markets. They should study the markets and develop an intuitive feel for how they move. It is common sense to develop a good knowledge base when investing your money.

But unless you have magical powers of prediction, a time proven crystal ball or a star to wish upon, be sure follow a time tested and unemotional timing strategy for profits.

Crystal balls are great toys and fun for party games, but they are not tools for investing your money. Wishing upon a star worked for Jiminy Cricket in the Disney movie Pinocchio, but it does not work in the financial markets.

S&P 500 SPDRs (NYSE: SPY) Turn Higher at Support

June 19, 2009

The S&P 500 SPDRs (NYSE: SPY) finally pulled back this week as traders took profits after a nearly non-stop three month advance.

On June 1 the SPDRs surpassed their 200-day moving average for the first time in well over a year. The market declines over the past week reached right to that moving average by the close on Wednesday, and on Thursday the market reversed and moved higher.

Is this the end of the correction?

If we continue higher on Friday, June 19, it will end the week on a strong note and we can probably look forward to gains early next week, barring a bad news event. However, a close below the 200-day moving average would likely result in lower lows.

The 200-day moving average is currently at SPY 90.86. Just below this level is the next support, the 50-day moving average at SPY 89.84.

The http://www.fibtimer.com ETF Strategy has a position in the S&P 500 SPDRs.